Price Gouging or merely entrepreneurship

Posted by $ blarman 4 years, 1 month ago to Philosophy
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John Stossel notes that "hoarding" really shouldn't be a dirty word and that raising prices is a signal to industry that profits are to be had. Said another way: what incentive is there for manufacturers to produce an emergency supply of something if they aren't getting compensated any more for doing it?
SOURCE URL: https://townhall.com/columnists/johnstossel/2020/03/18/price-gouging-n2565137


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  • Posted by CTYankee44 4 years, 1 month ago
    The best way to avoid hoarding is to allow the retailers to raise the prices as the demand rises.

    If that is insufficient then the retailers can and should impose purchase minimums not maximums. Imagine if irregular Costco customers had to buy not just 48 rolls of toilet paper but 240 at 6x the regular unit price! That's how you stop 'casual' hoarders from peeling the shelves bare. Very few are going to lay out $1,000 for toilet paper.
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    • Posted by $ 4 years, 1 month ago
      Purchase minimums. That's a novel approach. So basically you're encouraging customers to band together to make the minimum purchase at the necessary price. Novel indeed!
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      • Posted by CTYankee44 4 years, 1 month ago
        Minimums and high prices are a very effective deterrent to hoarding.

        Recall the Arab oil embargo of the early 70s. Recall the gas rationing & the odd/even day fiasco that caused long lines and 'NO GAS' signs at every station.

        What caused the shortages? It wasn't that the fleet was using more gasoline, but the fleet was storing all the fuel in what is known as the rolling reserve. It's the difference between the amount of fuel that the fleet holds as the 'average' tank of gas, which is typically less than 1/2 tank per car, and the 'hoarding' quantity when everyone who thought that gas would dry up, filled their tank to capacity.

        Foolish behaviour very quickly moved billions of gallons of gas from in the ground tanks to the trunks of Chevys, Fords, & Chryslers! The refineries couldn't refile billions of gallons on such short notice. So the big tanks were pumped dry. The fleet which would normally have carried 10 days of fuel, was rolling around nearly three weeks of capacity.

        So as soon as the in-ground tanks were refilled, then gas stations actually had to refuse deliveries because the customers had filled up. this caused a rebound ripple disruption of the fuel supplies. Refinery production was curbed, and that in turn caused another surge of fillups.

        It took a number of cycles for the panic to abate. But by then we were all paying 50% more for gas, and there was no relief in sight.

        tl;dr Sheeple are Stupid!
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  • Posted by Lucky 4 years, 1 month ago
    My heart says panic buying and hoarding are evil.
    My head says low stock levels and higher prices encourage more production.
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    • Posted by chad 4 years, 1 month ago
      There is nothing evil about panic buying and storing. If there is concern for something to be available purchase and store it for later use. If others don't that is their choice to risk it not being available. If the supply chain is unbroken the shortage will be short lived. If there is no supply those who respond first to prepare for a disaster should have the best opportunity to survive. The real interrupter of the supply chain will be the government forcibly shutting down businesses, travel and mandating what it considers to be necessary options.
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    • Posted by CTYankee44 4 years, 1 month ago
      The 'heart' is a dumb muscle.
      Listen to your head!
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      • Posted by $ Olduglycarl 4 years, 1 month ago
        Demo's listen to their heads, well, 1/2 their head anyway. Conscious folks listen to their minds.
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        • Posted by lrshultis 4 years, 1 month ago
          Is a conscious folk somehow different than a mind so that that folk is outside of the the mind and that consciousness must find out what the mind is doing?
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          • Posted by $ Olduglycarl 4 years, 1 month ago
            Conscious folk are obviously unicameral, both sides of the brain working in concert; therefore, they have access to their minds.
            It is the "Mind" that is able to keep an eye on the brain, which is primarily engaged in survival and wants and desires, (temptations.)

            It's been my observation that many dems are governed by only 1/2 the brain...usually the emotional side.

            However, I have met some that are in fact, unicameral...I ask them, why are you a democrat?...you have a mind, you don't like unions, you create your own value and sometimes share any abundance created cautiously.
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            • Posted by lrshultis 4 years, 1 month ago
              There is no reason to believe that a mind is not the brain functioning, i.e., that the brain is aware of itself ( the mind) and not in any way separate from the brain and thus not an outsider observing the brain.The mind is not a "ghost in the machine" which is installed by some supernatural god. Chemistry is really fruitful.
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              • Posted by $ Olduglycarl 4 years, 1 month ago
                Has nothing to do with mysticism...it's really simple.
                The mind is achieved via the brain when both halves work in concert, unicameral...as one. The body and the brain is made up of the quantum fields, energy fields and at the same time we live in these fields...you don't think there is any interaction between it all?
                The question is, are you "Aware" of this interaction, "introspection" or not, can your brain decode information gained from the field, environment?
                It takes cooperation of both halves of the brain to become aware of one's own awareness.

                Theory, of course, but this is the general direction integrated science is going in.

                Nothing has been found inside your head that is able to view itself, control itself, beyond survival behavior.
                Remember, the neurons in your brain are essentially compartmentalized.
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    • Posted by $ 4 years, 1 month ago
      The heart says that because of envy - you envy what you want and don't have. The brain says that the only way to get it is to pay more for it - which only happens when people are willing to sell what they have and are willing to trade.
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  • Posted by dansail 4 years, 1 month ago
    I look at it this way:
    1) I agree with John Stossel, that hoarding should not be a dirty word. I buy lots of something I value, nothing wrong with that.
    2) When someone goes to a store for the sake of buying out the stock and then reselling at a 'gouge' level price, then there's a problem. The two men in Tennessee who went around and filled a delivery truck of products they cleared out of stores CREATED the shortage. They didn't add value, they artificially shortcut the supply.

    Howard Roark added value. Henry Reardon added value. John Galt added value. Dagny Taggart added value. Nowhere in those novels were the hero's scrambling to create a market shortage just to gouge people who didn't get there first. That would be played out more by those characters depicted by the antagonists.
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    • Posted by $ 4 years, 1 month ago
      Another way to look at it is this: are you creating a long-term customer base or are you just in it for the short term? And are you willing to deal with the negative will that comes with such behavior?
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  • Posted by term2 4 years, 1 month ago
    We use isopropyl alcohol at our shop. It usually costs about 2.50 per bottle. Now it’s more like 20 per bottle IF you can find it at all. Everyone wants it and the supply is limited. Such is life
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    • Posted by $ 4 years, 1 month ago
      I wonder what the process is for making it. We typically don't think about supply chain much, but one thing Henry Ford did other than create the assembly line was work on integrated supply chains. Our world today is so segmented that a disruption in the supply chain just makes everything break down.
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      • Posted by term2 4 years, 1 month ago
        I have no idea how it’s made. I just get it as Costco. As we need it. One thing this Kung flu virus thing has taught me is to be a better inventory manager all around and not rely on supply chains in this globalized and uncertain world
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      • Posted by mccannon01 4 years, 1 month ago
        Distilling ethanol isn't difficult if you can get the raw materials. Not sure about Isopropyl.
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        • Posted by $ 4 years, 1 month ago
          I'd be interested in learning about either process. I've seen the "stacks" used at oil refineries where they basically just heat up the oil and allow it to separate by density, but I'm not sure if that process applies here or not. If you have a good link, please post it!
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          • Posted by mccannon01 4 years, 1 month ago
            The easiest way to make ethanol for us peons is the wine/moonshine process. That is through fermentation of sugars using yeast. The source of the sugar can be from most fruits (apples, grapes, whatever) and some vegetables (corn, beets, potatoes) and, of course, cane sugar.

            The science of getting a fermentation started is pretty simple - I've even started wine fermentation in a plastic trash can. Just throw in the fruit, some water, and a package of yeast (sugar too if you got it). If the goal is ethanol and not a good tasting adult beverage that's about all you need because you can leave out all the filtering and carboy steps. When the bubbling comes to a stop that usually means the fermentation has gone as far as it can for this batch - either the yeast ran out of sugar or the ethanol content has gotten high enough to kill off the yeast (usually before 20%). I'm writing in general terms here and this simple process will work almost all the time. Refining the process can result in more ethanol and prevent some things, like apples, from making vinegar instead of ethanol.

            The last step is to get the ethanol out of the fermented "mash" you just created. This is the distillation step and is also easy if you have the right equipment and pay attention to what you are doing. Here you have to know the flash or boiling point of ethanol is near 167 degF (I didn't look it up writing this) and water is 212 degF.

            A simple fermenting system can be a pot you can heat up equipped with a lid with a hose coming out of the top that can be spiraled down into a catch vessel. Now, heat the pot hot enough to flash off the ethanol and not the water. As you can see the hose has to be long enough so the flashed off ethanol can cool and condense back into a liquid. This method will never get you pure ethanol as it likes to bring water along with it. I think the strongest ethanol you can get with this simple method is maybe 70% ethanol with 30% water mix (140 proof).
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  • Posted by $ Olduglycarl 4 years, 1 month ago
    Greed/hording...was not a bad designation in ancient Greece...who else might have a stock pile in times of need...then the french got a hold of the word and used it to describe fat people.
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  • Posted by preimert1 4 years, 1 month ago
    My local 99 Cent store shelves were quickly emptied of bottled water, sanitizer, toilet paper and paper towels as customers bought them by the cart load. COSTCO said they had been bringing in truck loads of the same items every day for 3 weeks and selling out by 10AM every day. They kept prices the same, but had begun rationing some things.

    I went to Bristol Farms and Whole Foods and found ample supplies of everything I needed, but at a higher (every day) price. Am I supposed to be ashamed for supporting "price gougers"?

    But what about that guy who bought out the source of Epi-Pens and the raised prices by 1000 per cent? Your thoughts?
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    • Posted by $ 4 years, 1 month ago
      This really is a case for the morality of the marketplace. The question is what is sound business practice? Sound business practice is for buyers and sellers to encourage long-term relationships. The seller who is only in it to turn a quick profit at the expense of the buyer is surely going to do that at the expense of the good will which normally accompanies a business transaction which benefits both parties. If that ill will is noised abroad, that individual may find it difficult to obtain the things he/she needs for a "reasonable" price - karmic retribution if you ask me.

      Regarding the individual who bought out the epi-pens, that individual abuses the notion of free trade. I would argue that the proper response is not to do business with him and sue him (when someone has a reaction) for gross negligence, with the judgement being confiscation of the epi-pens and distribution to those needing them. (I would also mention that in lieu of this, this guy is asking for somewhat justified vigilante justice...)
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      • Posted by Lucky 4 years, 1 month ago
        para 1. Agree, each store owner/manager has some tricky decisions to make to maximize profit short term long term, satisfaction of customers present, and satisfy customers yet to appear. -Sell and run out, hide stock for regulars, price high to enable most customers to get supply but make all angry, rationing does much the same.
        What is certain is that government edicts do not stop irrational thinking or rumors. A free market enables different actions, rational or not, which provides some smoothing for price and supply shocks.

        para 2. Not convinced, maybe the fault was with the company who sold/invented the epi-pen. They did not price high enough thereby undercutting themselves as well as not providing sufficient incentive for a competitive product. With this argument, the new buyer priced right, but public opinion had by then valued the product at the (unrealistic and false) initial low price.
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        • Posted by $ 4 years, 1 month ago
          I agree that the scenario is one in which the gut reaction is to use coercion. The trick is what to do instead.

          There's another consideration with the epi-pen that maybe doesn't work for the immediate need, but which in the long run solves the problem: another seller in the marketplace. The availability of substitutes is key to getting the price down. If I'm not mistaken, one of the problems with the epi-pen is that it is still protected under patent. So until the patent lapses and generic supplies become available, supply is going to be naturally constrained and prices high just as a result of that.
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  • Posted by Katrina41 4 years, 1 month ago
    The fine line between profit from a crisis and extreme profit from a crisis. Profit to be able to grow the business is necessary. If one site sells sanitizer for $30 a bottle and another site sells the same product for $15, the market should self-correct. The question of ethics comes in when supplies are so short that the infrastructure is affected, i.e. when emergency and medical personnel can no longer get those supplies. Let us hope that we figure this out before we reach that point.
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    • Posted by $ 4 years, 1 month ago
      "The question of ethics comes in when supplies are so short..."

      In a free market, however, doesn't this encourage entry into the market for competitors seeking to make a profit? What is the real barrier to entry? Is it resource or artificial constraint, i.e. government? Remember, it requires two parties for a transaction: a seller AND a buyer. If both do so out of their own free will, isn't that by definition the free market?
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      • Posted by Katrina41 4 years, 1 month ago
        No argument there. I just keep remembering the"businessmen" in Atlas Shrugged, buying up evrrything, selling it fast and going on to the next opportunity. They had no thought as to the future, only how much money they could earn. They were the opposite of the Reardens, the Dannagers, who also made money, but by earning it. I realize that was a novel, but this world resembles a bad novel more each day. The question of ethics seems lost in our world, buried in an avalanche of progressive ideals. May not make much sense here. Fighting a bad cold for 4 weeks and caring for hubby with the same problem messes with my thought process. Sorry...
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        • Posted by Lucky 4 years, 1 month ago
          A good description of dilemmas facing managers in private business and government- there are business activities involving deals, and those requiring production (goods, services).
          Deal makers are popular everywhere, but productive people are undervalued especially in government which has to watch election timings.
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        • Posted by $ 4 years, 1 month ago
          All cogent points. But what truly is the moral dilemma? What you're really getting at has nothing to do with the monetary deal at all and has everything to do with the relationship between the buyer and the seller. By engaging in these types of deals, the seller is taking a higher monetary amount in exchange for a negative relationship with the seller. What has to be worked out is whether or not this negative relationship is moral or not because its going to bring into play altruism. If you believe that your relationship with other human beings has intrinsic value and purpose, then intentionally creating a negative relationship with another person (such as through a one-sided business deal) is going to be problematic. If you believe that altruism of any kind is to be shunned, then this shouldn't bother you at all - you're just an entrepreneur in it to make a buck.
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  • Posted by Owlsrayne 4 years, 1 month ago
    Once it was announced by the media and internet regarding the public situation to the coronavirus you had marauder going from store to store buying lots of toilet paper and sanitary products leaving store shelve empty. Those same store aren't restocking those products or selling them on a limited basis at certain times during the week and if you get there after that time it's all gone. Then if you go on Ebay you find toilet paper and those other item that the Marauders are selling at ten to 20 times there normal price. My wife who is a RN working at a post hospital care facility found out the a truck driver delivering supplies to them said the warehouses are stocked to the ceiling but don't have the enough personnel to load the the trucks. So. those trunks are not full when they leave the warehouse. In my opinion this has become a manufactured supply shortage to raise prices on sanitary and other products by the major retailers. I was lucky that a number small guest facilities in my city message on the local Next Door app for this area selling there toilet tissue inventory to people who are in need of it.
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